This week, I speak with Dr. Brett Steenbarger, a clinical psychologist who has published numerous articles and books on trading psychology. He is a clinical associate professor of psychiatry and behavioral sciences, and works as a trading coach with such storied forms as Tudor Investments. He blogs at TraderFeed.
He earned his bachelors degree at Duke in 1976; and received his Ph.D. from the University of Kansas in 1982. From there, he started what looked like a fairly typical academic career in clinical Psychology – NYC, Cortland, Cornell, Syracuse — over 20 years. A trader himself, it wasn’t long before he combined his two interests into a field of practice as a Trading Coach.
Steenbarger describes some of the simple steps traders can take too improve their performance and consistency over time. He emphasizes the importance of trading returns relative to the risk assumed.
One of the major themes he describes is the importance of Abraham Maslow and Martin Seligman’s “positive psychology” as applied to the trading discipline. It has an emphasis on human strengths and competencies versus the usual focus on on psychological disorders. (See e.g., this and this).
Steenbarger makes the case that performance fields – and that includes trading/investing – it is the leveraging of positive attributes that leads to lasting success. Strengths such as “adaptability, creativity, and the continual evolution of best practices into best processes.” This is a relatively recent phenomena in trading literature, and He gives credit for this to the participation of psychologists in financial markets.
Books and websites recommended by Steenbarger are here.
Next week, we speak with Charley Ellis — Chair of the Yale Endowment, Vanguard Board member and all around finance legend.